Anti-Money Laundering (AML)
November 19, 2019
Anti-money laundering describes a set of procedures, laws, and regulations intended to avoid or prevent criminals from transferring or disguising illegally acquired funds through cryptocurrencies as legitimate income (Kenton, 2019). Although AML regulations cover limited aspects of criminal behaviors and transactions, the impact is far-reaching. For instance, it requires all financial institutions involved in the transfer of cryptocurrencies to comply with AML regulations so that they do not assist in money laundering. There are compliance officers who are usually appointed to ensure that all financial institutions involved in the buying and selling of cryptocurrencies comply with AML laws. AML regulations and laws target illegally acquired funds from criminal activities, such as tax evasion, market manipulation, corruption in public funds, and trade in illegal goods. In addition, AML officers monitor and evaluate techniques used to hide or conceal the illegal funds and crime through cryptocurrencies.
Criminals often attempt to “launder” the illegally obtained money through activities, such as drug trafficking, so that the money cannot be easily traced. The most common technique of hiding illegally acquired funds is through the use of legitimate cash-based enterprises that are owned by either the criminals or by their associates. One of the strategies is by buying cryptocurrencies through illegally obtained funds, selling the cryptocurrencies, and withdrawing the funds. Also, they may sneak the illegally obtained funds to foreign countries and then invest in cryptocurrencies so that it does not raise suspicions. Often, they use dishonest brokers who will conduct the laundering in exchange for large commissions. Financial institutions involved with cryptocurrencies should monitor their clients’ activities and other transactions to ensure they avoid or prevent money-laundering. Moreover, they should report any suspicious cryptocurrency activities to law enforcement agencies so that they can monitor and evaluate financial documents for suspicious activities and inconsistencies (Kenton, 2019).